Annual remuneration reviews – are you being paid correctly?

Vanessa Sciortino | Special Counsel, Nicholsons Annual remuneration reviews – are you being paid correctly?

All caretaking agreements will provide for an annual review of the caretaker’s remuneration. Unless there has been a specific change that review will normally be on the anniversary of the commencement date of the agreement. 

Remuneration reviews in agreements can be specified to occur by the greater (or lesser) of two methods.  They are most commonly reviewed by a fixed percentage, CPI or market review. 

Care should be taken when considering the drafting of the review clauses to ensure they, firstly, work correctly and secondly, that there is sufficient detail included in the review clause  (particularly for a market review clause) which sets out the basis for working out the increase. 

Failure to properly draft such clauses could result in the clause being unenforceable and may affect the validity of the entire agreement.

As part of a legal due diligence process when purchasing, managers should discuss this with their accountants and/or solicitor to ensure this is checked carefully. 

Sometimes, managers assume that the body corporate manager will tell them when their review is and how much their increase is – however, this is not a requirement of the body corporate manager.  Some body corporate managers will do this, however, it is ultimately the manager’s responsibility to ensure their review happens in accordance with the agreement. 

Managers seeking to ensure their remuneration is properly increased should diarise the annual review date and ensure the review occurs as agreed. Bodies corporate cannot refuse to comply with remuneration review clauses – even during a pandemic.


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